Defendants Dvorak were the owners of a tract of vacant land in Belleville, N.J. A writing dated December 10, 1970 (but apparently signed several days thereafter) was executed by the Dvoraks as sellers and defendants Sciaraffa as purchasers. By its terms the writing provided for the sale, for $69,000, of the land together with the sellers' rights under a building permit which permitted the construction of a multiple dwelling of 21 units in accordance with plans on file with the building inspector of the Town of Belleville.

It is undisputed that plaintiff was the real estate broker whose efforts resulted in the execution of the writing.

The sale was never consummated because despite the fact that the writing embodied an acknowledgement by the sellers that they had received, "upon execution of this contract," the deposit of $6900 called for by the writing -- a deposit to be held in escrow by the sellers' attorney -- that deposit was never made. By letter dated January 6, 1971 the sellers' attorney advised the purchasers' attorney that, because the $6900 had not been received, "we deem the contract never to have come into existence and formally notify you that the seller considers neither party bound."

Plaintiff instituted this action against both the sellers and the purchasers to recover its 10% commission, amounting to $6900. After a trial before the judge without a jury, the judge ruled that plaintiff was entitled to the commissions claimed; that the failure to close title was not due to any default by the sellers Dvorak but rather to the default of the purchasers (Sciaraffas), and awarded plaintiff a judgment of $6900 against them. Only the Sciaraffas appeal.

Implicit in the trial judge's ruling was a finding that, contrary to what the sellers' attorney had written on January 6, 1971, a contract had come into existence. We shall assume

at this point that that finding was correct and not infected by evidential rulings -- to be discussed later -- precluding the development of testimony essential to a determination of whether in fact a contract had come into existence.

If, in fact, a contract had come into existence, then the record adequately supports the judge's further finding that the Sciaraffas, by not forwarding the $6900 deposit, had breached their contract with the sellers Dvorak, thus justifying the sellers' termination of the contract.

But the judge erred in his conclusion that merely because the sellers were thus justified in terminating the contract by reason of the purchasers' breach of contract, then, without more, under Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528, 558 (1967), the purchasers are "liable to the plaintiff for breach of their implied obligation to complete the transaction."

The trial judge misconceived the scope of the defenses available, under Ellsworth Dobbs, Inc. v. Johnson, supra, to an allegedly defaulting purchaser who is sued by a broker for the commissions he would have received from the seller if the sale had been completed. The judge erred in assuming that (1) merely because, as between a seller and purchaser, there has been a breach of contract by the purchaser, the purchaser is ipso facto liable for commissions to the broker involved, and (2) the purchaser's defenses to an action by the broker are limited to those which would be available in an action by the seller against the defaulting purchaser.

From the latter assumption stems the judge's failure to consider the Sciaraffas' contention that their obligation to perform was conditioned on their ability to obtain mortgage financing. Were this an action by the sellers against the purchasers, that contention would not be available as a defense since the written contract did not embody a mortgage contingency clause. The parol ...

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